Offshore Transmission Owner (OFTO) Tender Round 8 Launch 22 July 2021
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Offshore Transmission Owner (OFTO)
Tender Round 8 Launch
22 July 2021
Place title here, do not move the position of this box
Housekeeping
Welcome to the launch of OFTO Tender Round 8
• Webinar is not being recorded
• Slides and documents will be available online
• Questions in chat box please
2
Agenda
Time Speaker Subject
Welcome and housekeeping
0930 - 0935 Jennifer McGregor, Stakeholder Manager, Ofgem
Opening address
0935 - 0940 Jonathan Brearley, CEO, Ofgem
OFTO investment overview
0940 - 0945 Rebecca Barnett, Deputy Director, Offshore Networks, Ofgem
OFTO tender process update
0945 - 1010 Jourdan Edwards, Head of the OFTO Regime, Ofgem
Hornsea Two project overview
Richard Bodal Hansen, Head of OFTO transactions, Ørsted
1010-1030
Luke Bridgman, HOW02 deputy EPC director, Ørsted
Question session
1030 - 1055 Jennifer McGregor, Stakeholder Manager, Ofgem
Thanks and close
1055 - 1100 Rebecca Barnett, Deputy Director, Offshore Networks, Ofgem
3
Jonathan Brearley
CEO
Ofgem
Rebecca Barnett
Deputy Director, Offshore Networks
Ofgem
Jourdan Edwards
Head of the OFTO Regime, Ofgem
Ofgem
Place title here, do not move the position of this OFTO
box Tender Regime
• Bidders required to have technical
experience and financial capability
• Investors can involve an asset
manager as a consortium member,
or contract their services to
undertake that role
• OFTO awarded to bidder proposing
lowest Tender Revenue Stream
7
Place title here, do not moveKey
thecharacteristics
position of thisof
boxthe tender process
Enhanced Pre-Qualification
• Open to all to express interest/submit a bid
• Generally covers all projects in a tender
round
• EPQ questions ‘backward looking’, i.e.
bidders to show relevant infrastructure
experience on past projects
• Must evidence experience of:
• managing and operating either transmission assets
or other infrastructure assets (need not be UK
experience)
• raising finance for equivalent-sized acquisitions
8
Key features of EPQ
Financial standing – bidder solvency; experience of raising capital
Technical standing – experience of asset takeover; experience of managing
infrastructure assets
Prospective approach to asset takeover, management and operations, funding,
risk management
9
Place title here, do not moveKey
thecharacteristics
position of thisof
boxthe tender process
Invitation to Tender
Tender Revenue
Stream
• Bidders invited to participate
What the OFTO will
• ITT questions based on project specific assets, supported by electronic
receive data room of
to operate
and maintain the
information to undertake due diligence OFTO assets for a
• Questions evaluated on pass/fail basis, with lowest Tender Revenue
defined Stream
period of up (TRS)
to 25 years
winning
10Tender Revenue Stream
Revenue Impact of OFTO Performance
110.0% 105.0%
Tender Revenue 100.0% 100.0%
102.5%
Stream 90%
95%
90.0% 85%
What the OFTO will
Revenue
80%
receive to operate 80.0% 75%
and maintain the 70.0% 65%
70%
OFTO assets for a 60%
defined period of up 60.0% 55%
to 25 years 50% 50% 50%
50.0%
50% 60% 70% 80% 90% 100%
OFTO Availability
Payments are subject to bonuses/penalties
Income is Average
for over/ underperformance against the
unaffected by availability
target of 98% availability
output of wind farm 99.19%
Maximum annual penalty capped at 10%
11Key features of ITT
Asset takeover
Ongoing operations
Statutory and regulatory compliance
Decommissioning
Financial deliverability
Insurance
Tender revenue stream
12Place title here, do not move the positionTender
of this Round
box 8: Hornsea Two
Tender Round 8
Hornsea Two
OFTO for the world’s largest offshore
wind farm
Hornsea Two
Wind farm capacity: 1400MW
Enhanced
Invitation To Successful
Pre Preferred Bidder
Tender Bidder
Qualification
July 2021 December 2021 June 2022
to to To
December 2021 June 2022 May 2023
13Tender process timings
TR8 tender process: anticipated key timings
EPQ Stage
Milestone Date
EPQ commences (tender documents available) 22 July 2021
Bid submission deadline 7 October 2021, by 12 noon
ITT shortlist announced 6 December 2021
ITT Stage
Milestone Date
ITT stage commences (tender documents available/data room opens)* 13 December 2021
Bid submission deadline 14 March 2021 2022
Announcement of preferred bidder Late-May/early-June 2022
Estimated Transfer Date/Licence Grant** Early-December 2022
* Where feasible, the project data room will open ** Based on a default period of 6 months for the
to bidders earlier transaction period to complete 14Barrow
Gunfleet
Robin Rigg
Greater Gabbard
Ormonde
Sheringham
Thanet
Walney I
Walney 2
Lincs
WODS
Gwynt y Môr
London Array (Phase 1)
Westermost Rough
Humber Gateway
Burbo Bank Extension
Walney extension
Race Bank
Dudgeon
Galloper
Hornsea 1
Rampion
Beatrice
East Anglia One
Triton Knoll
Moray East
Hornsea 2
Seagreen
NnG
Dogger Bank A
Dogger Bank B
Dogger Bank C
Sofia
East Anglia Three
Inch Cape
Moray West
Norfolk Vanguard
Hornsea 3
East Anglia One North
East Anglia two
Norfolk Boreas
Berwick Bank
Marr Bank
Hornsea 4
Rampion 2
Five Estuaries
North Falls
Dudgeon Extension
Sheringham Shoal Extension
Place title here, do not move the position of this
Future
Planning
complete
Consented
in progress
Divestment
box of OFTO to 2030
Development
15
Tender process
Tender process
begins 2021/22Next Steps
Next Steps for TR8
Tender documentation is now available on the Ofgem website. This includes:
• EPQ Document
• Generic and project specific Preliminary Information Memoranda
• Draft Licence and associated guidance
https://www.ofgem.gov.uk/energy-policy-and-regulation/policy-and-regulatory-
programmes/offshore-electricity-transmission-ofto/offshore-transmission-tender-
publications (please use the filter ‘Tender Round 8’ to locate these).
Some documents (draft Transfer Agreements and Information Memoranda) can only be
obtained after signing a Confidentiality Agreement and Conflict of Interest certificate,
available through Ofgem’s online e-tendering portal (from 28th July).
To register your interest and access the tender documents:
• Go to Ofgem’s online e-tendering portal at: https://ofgem.bravosolution.co.uk/web
• Create an account, register your interest in TR8 and access the documents.
• Any questions or comments can be directed to: tendercoordinator@ofgem.gov.uk
16Hornsea Project Two
(HOW02)
Project Overview
Tender Round 8 Launch Event
22 July 2021Agenda and HOW02 introduction
Agenda HOW02 OFTO Divestment Team
Agenda and HOW02 team introduction
Luke Bridgeman
An introduction to HOW02
HOW02 EPC Director – Transmission
Joined Ørsted in 2014
Background in engineering and construction leadership
Ørsted’s experience
Richard Bodal Hansen
HOW02 project organisation Head of OFTO transactions
Joined Ørsted in 2012
M&A and legal background
HOW02 OFTO assets
Sacha Henty
The investment opportunity Senior OFTO Transaction Manager
Joined Ørsted in 2019
M&A background, incl renewables and oil & gas
Construction update
18HOW02 will be the world’s largest offshore wind farm…
Situated in the attractive Hornsea Zone leased
in Round 3, HOW02 is a record breaking
project:
• Largest MW wind farm in the world
• Furthest from shore
• Largest transmission asset
19…built using proven technology and market leading Ørsted experience
Location and layout
Characteristics Parameter Summary
Well known operating environment Support regime Contract for Difference
Capacity 1320 MW1
Well known and proven technology
Water depth 28-43 metres LAT
Well tested and successful construction approach Length of export cable
route ~130km offshore and ~38km onshore
Well designed with efficient cost and operability Number of WTGs2 165 Siemens Gamesa 8.4 MW
20 1 1320 MW Transmission Entry Capacity (TEC), 1386 MW Connection Entry Capacity (CEC)
2 Wind Turbine GeneratorØrsted pioneered the offshore wind industry
9,771 MW
7,551MW
Unrivalled track-record in offshore wind
Ørsted cumulative constructed offshore wind power capacity (MW) 5,581MW
5,094 MW
3,623 MW 3,889 MW
2,487 MW
2,098 MW
1,371 MW
1,004 MW
476 MW
5 MW 50 MW
1990 2001 2005 2010 2012 2013 2014 2016 2017 2018 2019 2020 2022
Pre-2009: Project by project Post-2009: Industrialised approach to planning and execution of offshore wind projects
Vindeby Horns Rev 1 Hornsea 1 Hornsea 2
First offshore wind farm First large scale offshore wind farm in The largest operational offshore wind The world’s largest offshore wind farm
in the world the world farm in the world once constructed
Capacity: 5 MW Capacity: 160 MW Capacity: 1218 MW Capacity: 1320 MW1
No. of turbines: 11 No. of turbines: 80 No. of turbines: 174 No. of turbines: 165
21 1 Transmission Entry Capacity (TEC)Our experience of OFTO assets
OFTO transactions overview Transfer Value1
TR1 Non-Ørsted
TR1 Robin Rigg Sheringham Barrow Greater Gunfleet Ormonde Thanet Walney 1 Walney 2 Ørsted
Shoal Gabbard Sands 1+2
TR2
TR3
TR2 London Array West of Duddon TR4
Lincs2 Sands Gwynt y Môr
TR5
TR6
TR3 Westermost Humber Gateway
Rough
TR7
£m
0 500 1,000 1,500 2,000 2,500
TR4 Burbo Bank Ext
Capacity
TR1
TR5 Dudgeon Race Bank Galloper Walney Ext Rampion
TR2
Non-Ørsted
TR3 Ørsted
TR6 Beatrice Hornsea 1 East Anglia 1
TR4
TR5
TR7
Moray East Triton Knoll TR6
TR7
TR8 MW
Hornsea 2 0 500 1,000 1,500 2,000 2,500 3,000
22 1 Based on public information
2 Centrica was the operating partner for Lincs construction and OFTO divestmentHOW02 ownership and project organisation
Ownership overview
Ownership structure
HOW02 is being developed by Breesea Limited, Soundmark Wind Limited and Sonningmay Vendors Ørsted A/S
Wind Limited (collectively the “Developer” or “Vendors”), which are indirect subsidiaries of
Ørsted A/S (together with its affiliates, “Ørsted”)
Ørsted Wind Power Holdings
Ørsted acquired Optimus Wind Limited and Breesea Limited (which were the project owners, A/S
and subsidiaries of Smart Wind Ltd.) from Smart Wind Ltd. in August 2015. Soundmark Wind
Limited and Sonningmay Wind Limited were subsequently incorporated into the project in
April 2017 Ørsted Wind Power A/S
Optimus Wind Limited is a wholly owned subsidiary of Breesea Limited, Soundmark Wind
Limited and Sonningmay Wind Limited
Soundmark Wind Sonningmay Wind
The majority of the construction contracts sit with Optimus Wind Limited, with asset title Breesea Limited
Limited Limited
transferring to Breesea Limited, Soundmark Wind Limited and Sonningmay Wind Limited at
construction completion Optimus Wind
Limited
Experienced project organisation Project organisational structure
Programme Steering
Committee
Ørsted has an unrivalled track-record in offshore wind nearing 30 years experience
Programme
HOW02 leverages this organisational experience, benefiting from Ørsted’s mature and Director
industrialised approach to planning and execution of offshore projects
Finance EPC Director - EPC Director - Asset Consent
The project team benefits from the significant experience gained from previous Manager Generation Transmission Manager
transmission asset construction and divestment processes
Project Managers
Safety and environmental impact are key focus areas for the delivery of the assets
Offshore Onshore
Turbines Foundations Electrical Construction
Substation Substation
23Overview of the infrastructure
Generation assets Transmission assets
OFTO NGET
Onshore NGET
Offshore Reactive substation substation
substation compensation
station
Inter-array Export Export
cables cables cables
165 Siemens 8.4 MW on The offshore substation transforms the power collected from The onshore substation is connected to National Grid at
monopile foundations the turbines from 66 kV to the 220 kV voltage levels Killingholme
The array comprises three Within the offshore substation an interlink between the three The transmission assets which will be transferred to the
circuits - NW, NE, SW. Each circuits provides partial redundancy reducing risks to OFTO comprise of the offshore substation; the reactive
comprising of 6 feeder operational availability compensation station; the export cables, both offshore
connections to the offshore The power is transported from the offshore substation, via a and onshore; the onshore substation and the 400 kV
substation reactive compensation station, to the onshore substation connection to National Grid
through three 220 kV offshore and onshore export cables
24HOW02: the investment opportunity
Project highlights
1386 MW generation capacity1 with transmission asset Initial Transfer Value 1.212 GBPbn
Highlights
Transmission asset construction nearing completion
Favourable site conditions and well known location
Project The characteristics of the site enable the project to make use of known technology
Mature and efficient design based upon previous operational experience, resulting in highly operable and robust assets
Supply chain Experienced supply and installation contractors procured by Ørsted
Experienced Ørsted active in the offshore wind sector for nearing 30 years
Developer and Ørsted has participated in the majority of Ofgem’s OFTO tender rounds to date
EPC Manager Competencies in place to deliver the project to the highest industry standard
Appropriate interim maintenance arrangements will be in place until asset transfer
With a long track record of operating wind farms in Europe, Ørsted is greatly experienced in managing the long term
O&M
operation of windfarms and associated transmission assets
Ørsted expects to offer an O&M agreement (OMA) for the service of the HOW02 transmission assets
Project specific transfer and interface agreements based on Ofgem guidelines and market developments
Transfer of OFTO related contracts including benefit of supplier warranties
Transaction
Division of responsibilities pre- and post- asset transfer
Credit support to be procured by the Developer
25 1. 1320 MW Transmission Entry Capacity (TEC), 1386 MW Connection Entry Capacity (CEC)HOW02 - An update on the construction progress
HOW02 installation and construction 1
Q4 2015 Q3 2017 H2 2018 Q3 2020 Q4 2021
Application for Final Onshore Offshore ION B
2010-2017 Investment construction construction start Certificate
Development
Site surveys and geoscience Decision authorising
Consent Order start Q2 2021
campaigns
Energisation of
first power export
transmission system
2015 2016 2017 2018 2019 2020 2021 2022
2011 Q3 2016 Q4 2017 Q1 2020 Q2 2021 Q1 2022
Grid connection Development Investment Crown Estate WTG WTG
agreements with Consent Order Contracts (CfD) Leases signed installation commission
National Grid granted signed
start2 complete
Onshore progress Offshore progress
Onshore Substation Offshore Substation & Reactive Compensation Station
Onshore construction complete and commissioning ongoing Jackets installed
All HV components delivered and installed Topsides nearing completion, ready for sailaway in August 2021
Onshore Export Cables Offshore Export Cables
All cables installed and joints complete Jointing and cable laying ongoing, due to complete H2 2021
26 1. All future dates indicative and subject to change
2. Wind Turbine GeneratorConstruction photos – Aerial view of Onshore Substation 27
Construction photos – Reactive Compensation Station & Offshore Substation in yard 28
Construction photos - Subsea and Onshore Export Cable Installation 29
Our vision Let’s create a world that runs entirely on green energy
This presentation has been prepared by, and is the responsibility of Ørsted A/S or its wholly-owned subsidiaries Breesea Limited, Soundmark Wind Limited and Sonningmay
Wind Limited (together, the "Sellers"), and has been prepared in connection with the proposed sale by the Sellers of the offshore transmission system assets relating to the
Hornsea 2 offshore wind farm project (the "Proposed Transaction").
For the purposes of this disclaimer: this "presentation" shall mean and include these slides, the oral presentation of the slides by the Sellers or any person on their behalf, any
question-and-answer session that follows the oral presentation, together with electronic and hard copies of this document; and any reference to any provision of any legislation
herein shall include any amendment, modification, re-enactment or extension thereof. This presentation has not been approved by any authorised person for the purposes of
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None of the Sellers or any of their respective directors, officers, partners, employees, agents, affiliates, representatives or advisers (together, "Affiliates") or any other person
makes any representation or warranty, express or implied, as to the accuracy or completeness of the information or opinions contained in this presentation to any recipient
(except Ofgem) and no reliance should be placed on the accuracy, completeness or fairness of the information or opinions contained in this presentation (including any
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other person accepts any liability whatsoever by any recipient (save in relation to Ofgem) for any errors, omissions or inaccuracies in such information or opinions or for any
loss, cost or damage suffered or incurred howsoever arising, directly or indirectly, from any use of this presentation or its contents or otherwise in connection with the subject
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basis of, or be relied on in connection with, any contract or commitment or investment decision whatsoever by any recipient (except Ofgem). This presentation is not intended
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The information contained in this presentation is provided as at the date of its publication and is subject to updating, completion, revision, amendment and further verification
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All information presented or contained in this presentation is subject to verification, correction, amendment, completion and change without notice, and such information may
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information set forth in this presentation after the date hereof.
31This presentation is being distributed only to and is only directed at: (i) persons in member states of the European Economic Area ("EEA") who are "qualified investors" within
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32 22 July 2021Questions
Contact information
Ofgem tendercoordinator@ofgem.gov.uk
Orsted RICBO@orsted.co.uk
BEIS investment.screening@beis.gov.uk
Financial advisers to Ofgem kate.mingay@smithsquarepartners.com
adam.macdonald@centrusadvisors.comThank you for joining us
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